Correlation Between Cultural Investment and NBTM New

Can any of the company-specific risk be diversified away by investing in both Cultural Investment and NBTM New at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Cultural Investment and NBTM New into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cultural Investment Holdings and NBTM New Materials, you can compare the effects of market volatilities on Cultural Investment and NBTM New and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Cultural Investment with a short position of NBTM New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cultural Investment and NBTM New.

Diversification Opportunities for Cultural Investment and NBTM New

-0.25

Correlation Coefficient

Cultural Investment  NBTM New

Very good diversification

The 3 months correlation between Cultural and NBTM is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Cultural Investment Holdings and NBTM New Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NBTM New Materials and Cultural Investment is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Cultural Investment Holdings are associated (or correlated) with NBTM New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NBTM New Materials has no effect on the direction of Cultural Investment i.e., Cultural Investment and NBTM New go up and down completely randomly.

Pair Corralation between Cultural Investment and NBTM New

Assuming the 90 days trading horizon Cultural Investment Holdings is expected to generate 1.04 times more return on investment than NBTM New. However, Cultural Investment is 1.04 times more volatile than NBTM New Materials. It trades about 0.09 of its potential returns per unit of risk. NBTM New Materials is currently generating about -0.04 per unit of risk. If you would invest  179.00  in Cultural Investment Holdings on October 10, 2024 and sell it today you would earn a total of  29.00  from holding Cultural Investment Holdings or generate 16.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Cultural Investment Holdings  vs.  NBTM New Materials

Cultural Investment

Risk-Adjusted Performance

6 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cultural Investment Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Cultural Investment sustained solid returns over the last few months and may actually be approaching a breakup point.

NBTM New Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NBTM New Materials has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Cultural Investment and NBTM New

The main advantage of trading using opposite Cultural Investment and NBTM New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cultural Investment position performs unexpectedly, NBTM New can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in NBTM New will offset losses from the drop in NBTM New's long position.

The idea behind Cultural Investment Holdings and NBTM New Materials pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.